Labor tensions mount at Jackson Health System

Labor tensions are mounting at the Jackson Health System, with the public hospitals almost two months into the new fiscal year without crucial union contracts.

“They’re throwing grenades at us,” said Martha Baker, head of SEIU Local 1991, which represents Jackson nurses and other healthcare professionals. She was referring to the recent announcements of two-week furloughs and the elimination of 240 positions. “I think they’re going to keep throwing grenades until we come to the table and agree to their demands.”

But Jackson Chief Executive Carlos Migoya said he’s doing what he must to cut labor costs by $120 million in order to meet his break-even budget for a fiscal year that began Oct. 1. “We don’t have a labor agreement. Therefore, we have to find other ways to get the savings.”

Jackson has already declared impasse with the system’s other major union, the American Federation of State County and Municipal Employees, which represents aides, dieticians, janitors and other workers. Impasse is a legal step for government labor unions that will lead to hearings before a magistrate. If the magistrate can’t get the sides to agree, the Miami-Dade County Commission will decide on compensation for the union’s employees.

SEIU and Jackson are still negotiating. SEIU has offered $36 million in compensation reductions — about half what it says Jackson is asking for — on the condition that the savings be spent to improve patient care. But Baker acknowledged the sides remain far apart on many issues.

Both unions have seen this battle coming for more than a year, as Jackson’s finances have grown increasingly dire. Jackson executives say they’re under severe pressure because of dire shortfalls in patient revenue. They project that even with drastic measures, they will be down to 12 days of cash on hand in December. Earlier this month, Migoya ordered most employees to take two weeks of unpaid furlough. On Nov. 17, Migoya announced he was slicing 240 positions — about 170 of them filled by employees who will be laid off.

Many employers have well prepared layoff procedures, with affected workers called in quickly and given severance packets. But at Jackson, no specifics were announced about which employees were being laid off. Baker said more than 200 panicked SEIU members packed two meeting rooms in the Diagnostic Treatment Center on the afternoon of the layoff announcement, desperate to know if they were on the lists.

The list of the 171 persons being laid off, finally released by Jackson Wednesday, shows three nurse practitioners and 43 in other areas, such as social work, who belong to SEIU. It also showed 89 AFSCME members and 32 non-union employees, including five managers and two mid-level executives.

Migoya said he was trying to be selective in the layoffs because he didn’t want to damage patient care and because Jackson has a nursing shortage.

Still, some experts wonder why Jackson hired 141 nurses, 106 of them full time, in the three months that ended Oct. 31, just before mandating furloughs and layoffs. “These furloughs may end up costing them money,” said Joshua Nemzoff, a hospital consultant who follows Jackson closely.

Since hospitals need to run around-the-clock, a two-week furlough is the equivalent of a 4 percent reduction in the workforce — which could lead to increased overtime for nurses if there’s a shortage.

Sal Barbera, a former hospital executive who now teaches at Florida International University, said that he applauded executives’ “swift action” to cut 240 positions: “Labor is where Jackson needs to attack its overall cost issues.”

In the labor negotiations, Jackson officials have been looking for a partial rollback of the 3 percent cost-of-living increase that union members received in July, a freeze in annual raises called step increases, a continuation of employees contributing 5 percent of their salaries to health insurance, a contribution of 3 percent toward pension benefits and other measures.

SEIU’s Baker said that in the bargaining sessions — another was held Wednesday — she’s focusing on how big a concession Jackson really needs from labor to balance its budget. She said she thinks Migoya has “some padding” in the $120 million figure he uses. Baker has repeatedly said that healthcare workers are different from other government employees: Firefighters can’t walk across the street to an equivalent job if their pay is cut, but nurses and other professionals can easily change employers.

A Miami-Dade grand jury report in 2010 criticized Jackson’s labor costs as being way too high. Using annual audits, Jackson’s labor costs were 53.2 percent of total operating costs — higher than Baptist Health South Florida’s 46 percent, but lower than the 57.4 percent of Broward’s Memorial Healthcare System.

Jackson nurses start at $25.54 an hour, compared to $24.80 for non-union Baptist and $23 for non-union Memorial — fairly similar salaries. But there’s quite a difference in the average nurse’s salary. Jackson is highest, at $38.56, followed by Baptist at $33.54 and Memorial at $32.72.

Baker said the reason for the disparity is that Jackson nurses tend to be older, with more years at the hospital, often staying because they can get a pension that many hospitals do not offer.

Migoya disagrees: He says Jackson nurses’ salaries rise quickly with built-in annual step increases and cost-of-living adjustments that can add 8 percent annually to salaries — increases that he’s trying to curtail. For comparison, Memorial nurses received increases of up to 3 percent or less this year, depending on performance, according to spokeswoman Kerting Baldwin.

Several hospital consultants have said Jackson’s rich benefit package drives up labor costs. But Jackson reports that total benefits add 25.85 percent to its labor costs — compared with 33 percent of total labor costs at Baptist Health and 20 percent at Memorial, both of which are financially prosperous. Jackson has lost more than $420 million the past three years.

Another major issue is staffing: Jackson averages 7.24 employees per occupied bed, compared to 4.48 employees per bed at Memorial Regional. Migoya and Baker both say that Jackson has more complicated patients — organ transplants, for example — that require more staff, but Jackson critics have long suggested that Jackson’s nonclinical staff may be bloated.

Migoya said in an interview Tuesday that Jackson is below the benchmark of 6.65 employees per bed for other teaching hospitals.

Of the 240 positions abolished, many are nonclinical including secretaries, support clerks and transport aides, according to the list Jackson released Wednesday. Baker said she has seen bureaucratic creep at Jackson: There used to be three levels of administration overseeing nurses. Now there are five or six levels.

Baker placed much of the blame for high labor costs on University of Miami doctors who head Jackson’s clinical departments, account for 98 percent of physician care at Jackson Memorial and oversee the residents who train at Jackson. “UM docs control the spend-meter,” Baker said.

Another major bargaining issue: Migoya wants to be able to send nurses and clinical staff home when they’re not needed, a common practice in many hospitals. Baker said Jackson managers already have the flexibility to move nurses to busier areas as needed, but shouldn’t be able to simply send them home.

One other problem with Jackson’s labor costs: The Friday after Thanksgiving is a paid holiday for all Jackson employees, as it is for other Miami-Dade County employees. For Jackson’s big competitors — Baptist Health South Florida, HCA and Memorial Healthcare System — Friday is a normal workday.

“For Miami-Dade police, maybe an extra holiday doesn’t matter,” said Marcos Lapciuc, chairman of Jackson’s board. “They don’t have to compete with the Broward Sheriff’s Office. But we have to compete with other hospitals, so this kind of thing hurts us.”